"I think it's a very important development," says BrianLancaster, a managing director in Bear Stearns' Financial Analyticsand Structured Transactions Group. "As time goes by, it will bringin more investors and increase liquidity in these lower-ratedtranches." For example, the bid-offer spread for the AA, A, BBB andBBB- commercial mortgage-backed securities currently ranges up to10 basis points and could tighten to 3 to 6 basis points, hesays.

Currently, ERISA pension plans can buy BBB and subordinatedcorporate bonds but not similarly rated CMBS.

Lancaster, the author of a Bear Stearns report titled,Publication of Proposed ERISA Regulations Would Expand InvestorBase in Lower Rated CMBS, notes that the largest initial investmentincreases are expected in the AA and A-rated sectors because theytend to be influenced less by the underlying real estate. Athorough understanding of real estate is typically required ofthose investing in BBB and BB- CMBS.